Unpaid invoices can have a negative impact on the cash flow and profitability of companies in Switzerland. To prevent overdue payments and manage receivables effectively, it’s important to implement sound credit policies and use receivables management tools. In this article, we explore best practices for preventing overdue payments and effectively managing receivables in Switzerland.
Credit risk assessment
The first step in preventing non-payment is to assess the credit risk associated with each customer before granting them credit. Companies can use tools such as credit checks to assess their customers’ financial capacity to repay their debts. It’s important to remember that credit risk assessment should be reviewed regularly to ensure that customers are still able to repay their debts.
Sound credit policies
Sound credit policies are essential to prevent non-payment. Companies must have clear policies on payment terms, credit limits, collection procedures and action to be taken in the event of default. It’s important to communicate these policies clearly and concisely to all customers.
Fast, accurate billing
Accurate and prompt invoicing is essential to avoid non-payment. Companies must ensure that invoices are correct and sent to customers as soon as possible after delivery of goods or services. Invoices should be easy to understand and include all the information necessary for the customer to make payment.
Payment tracking
Payment tracking is essential for effective receivables management. Companies need to keep track of their customers’ payments and ensure that payments are made on time. It is important to contact customers as soon as possible in the event of late payment, and to set up dunning procedures for late payments.
Managing overdue receivables
If customers don’t meet payment deadlines, it’s important to manage overdue receivables effectively. Companies may consider using receivables management tools such as automatic reminders and reminder letters to help recover late payments. It’s important to communicate clearly with overdue customers to understand their situation and find an amicable solution.
Collection of overdue receivables
If receivables remain unpaid, it’s important to initiate collection procedures quickly to recover the sums owed. Companies may consider using professional debt collection services to help them recover outstanding receivables.
Conclusion
In conclusion, preventing non-payment and effectively managing receivables are essential to the financial health of companies in Switzerland. Companies need to assess the credit risk associated with each customer, implement sound credit policies, monitor customer payments, effectively manage overdue receivables and initiate collection procedures where necessary. Companies can also consider using receivables management tools such as automatic reminders and reminder letters to help recover late payments, as well as professional debt collection services to help them effectively manage the collection process. By implementing these best practices, companies can reduce the risk of non-payment and improve cash flow, while maintaining strong business relationships with their customers.
